That’s what whistleblower Harry Markopolos believes, anyway. Mr. Markopolos – who for years tried to alert the SEC to problems in Mr. Madoff’s financial operations – told Congress on Feb. 4 that too many government financial regulators are too young, and lawyers to boot.

What the SEC really needs, Markopolos said, are people who have been around long enough to understand the schemes money managers can dream up. That means people with math skills, instead of law degrees, and experience in financial markets. Years of experience.

A securities industry executive and independent fraud investigator, Makopolos was the star witness at a hearing of a House Financial Services panel that was not-so-gently titled “Assessing the Madoff Ponzi Scheme and Regulatory Failures.”

Madoff, a prominent Wall Street financier, was arrested this past December and charged with running a $50 billion pyramid fraud, in which early investors are paid off with cash from later ones, and trading profits are nonexistent.

First warning in 2000

Markopolos first took his suspicions about Madoff to the SEC’s Boston office in 2000. It was mathematically impossible for Madoff to produce his claimed returns, Markopolos told regualtors at the time. They were too steady, and too large, among other things.

But no one paid attention. Or, at least, no regulator paid enough attention to pursue the case.

Now Madoff is under house arrest, and individual investors, charities, universities, and others who trusted him with their money are facing unprecedented losses.

Not impressed with SEC

Unsurprisingly, the man who tried to warn the SEC now has a low opinion of the agency’s investigative skills.

“If you flew the entire SEC staff to Boston, and set them in Fenway Park for the afternoon, they would not be able to find first base,” said Markopolos, a self-professed Red Sox fan.

As a congressional witness, Harry Markopolos had something of an air of mystery about him. A former Army Special Operations officer, he said that at times he and his staff had been worried about safety during their lengthy investigation of the Madoff operation.

“We feared for our lives if he discovered we were tracking it,” said Markopolos.

Links to organized crime?

Markopolos also alleged that there has been extensive investment by drug cartels and Russian crime figures in some of the offshore “feeder funds” that invested heavily with Madoff. And he described an incident in which he tried to slip a copy of his Madoff file, anonymously, to then-New York Attorney General Eliot Spitzer.

“I used gloves” to ensure there were no fingerprints on the file, said Markopolos.

Markopolos said he assumed at the time that Spitzer, through his family, was likely to be invested in Madoff funds. That turned out to be the case.

The whistleblower said that he privately warned many investors and investing firms he knew to stay away from Madoff – and they stayed away.

As to Madoff’s victims, “they want someone to clean house with a very wide broom,” said Markopolos.

Besides a more senior staff, the SEC should establish a central clearinghouse to look at whistleblower tips, said Markopolos. And it should offer financial incentives for its own staff to bring and win big fraud cases.

SEC can't answer

A panel of SEC officials followed Mr. Markopolos to the witness table. They insisted that they remain committed to bringing Madoff to account in a court of law.

But as to why they ignored years of warnings about Madoff’s action, they said that ongoing legal actions meant they must decline to answer.

“We cannot answer as to the specifics,” said Lori Richards, director of the SEC’s Office of Compliance Inspections.